InCred Sees 26% Upside in HAL & BEL Amid Defence Budget Surge and Geopolitical Tensions
InCred Equities initiates bullish coverage on HAL and BEL, forecasting up to 26% upside backed by strong order books, government spending, and rising exports in India’s defence sector
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Brokerage InCred Equities has initiated coverage on heavyweight defence PSUs Hindustan Aeronautics (HAL) and Bharat Electronics (BEL), projecting up to 26% upside in their share prices.
This bullish stance reflects several converging factors:
Heightened geopolitical risk: Continued tensions in the Middle East and India–Pakistan border have sharpened investor focus on defence plays .
Defence budget boom: India’s defence allocation has swelled from ₹2.7 lakh crore in FY16 to ₹6.8 lakh crore in FY26, with a strong mandate to boost domestic production under “Make in India” and Defence Acquisition Procedure — nearly 75% of modernization funds now earmarked for local firms.
Order book dominance: HAL and BEL together contribute roughly half of all defence PSU output—HAL with ~27% from aircraft and avionics, BEL ~21% focusing on radars, communications, and electronic warfare.
HAL outlook
Rating: Add
Target Price: Rs 6,325 (40× P/E FY27F estimates)—implying ~26% upside.
Drivers: Strong order backlog, indigenization of Tejas, Dhruv helicopters, and modernization initiatives.
BEL outlook
Rating: Add
Target Price: Rs 459 (44× P/E FY27F EPS ₹10.4)—significant upside from current levels.
Catalysts: Robust visibility, exports boost (e.g., Operation Sindoor), and MoD support.
Sector Outlook & Validation
Antique Stock Broking also ranks HAL, BEL, and Mazagon Dock Shipbuilders as top defensive picks, pointing to a strong ₹16 trillion defence order pipeline that supports long-term growth.
Jefferies and JPMorgan echo this optimism, highlighting margin gains, export momentum, and structural growth in defence and power infrastructure.
| Company | Rating | Target Price | Upside (%) | Key Drivers |
| HAL | Add | Rs 6,325 | ~26% | Aircraft & helicopter backlog, indigenisation |
| BEL | Add | Rs 459 | — | Strong electronics order flow, export growth |
With governments doubling defence budgets and prioritizing Indian manufacturing, HAL and BEL are well-placed to benefit. Their large order books, earnings visibility, and policy tailwinds make them strong contenders for those seeking stable long-term growth in defensive plays. That said, high P/E multiples and execution risks warrant cautious positioning.
